Wednesday, June 09, 2010

In addition to the primary races for various California political offices, there were a number of propositions on the ballot that were somewhat controversial. And I think I found some interesting trends for those propositions.

First, let me give you a rundown on the propositions:Proposition 14, Open Primary:Proposition 14 changes the way Californians elect local candidates for state and federal offices. Under Prop. 14, only the top two vote-getters in the primary election will advance to the general election. This is irregardless of political party. So in a particular district, you could see two Republicans advance to the general election of a political office because they received the most votes in a primary election, and there will be no Democrat on the ballot--or visa versa. And since third party candidates rarely beat out Democratic or Republican candidates for offices, you are never going to see such third party candidates running for offices on general election ballots. This open primary does not affect the presidential election. Currently, the primary election advances the top vote-getter from each political party to the general election. California Governor Arnold Schwarzenegger promoted Prop. 14, and have given $1.7 million to support the campaign. Prop. 14 passed with 54 percent of the vote over 45 percent. This is huge. It has turned California politics on its head. Before Prop. 14, elections were between candidates of the two main political parties--the Democrats and Republicans. If you didn't like either of the main party candidates, you could always toss a protest vote towards one of the third party candidates--Libertarian, Peace and Freedom, or the Green Party candidate. But now with Prop. 14, you could have a situation where the top two candidates for a congressional district would go to Democratic candidates in a district which was redrawn to increase the number of Democratic voters in that particular district. Republican voters in that particular district would have no Republican candidate to vote for in the general election for that congressional district. You can reverse the situation for Republican-leaning districts showing two Republican candidates running in the general election, and no Democratic candidates for Democratic voters in the Republican-leaning district. You have severely limited your choices. And third party candidates are completely screwed with this proposition.

I'm not sure how the political parties are going to respond to this proposition. Are the main political parties going back to backroom horse-trading for selecting their candidates for offices, just to make sure they one or both top vote-getters for a district, or office? How are the third parties going to respond to this proposition, since they are on the fringes of votes tallied in elections? Finally, there is this situation where eBay CEO Meg Whitman spent $80 million to win the GOP primary for the governor's office. What if you had two ubber-CEO's, each spending $80 million of their fortunes on negative campaigning, splitting a close vote in a party primary? Who would advance to the general election? Or maybe both ubber-CEOs would gain enough votes so that both would advance to the general election, locking out the candidate from the opposing party? This election has shown just how pervasive money can be in winning primaries with Meg Whitman spending gobs of cash for capturing the GOP nomination. How does Whitman's spending gobs of cash reflect in a primary process that has eviscerated the political parties? I'm not sure I fully understand the consequences in the passage of this proposition.

Proposition 16, Public Electricity Initiative:Proposition 16 was an initiative which required two-thirds voter approval before a local government agency could enter into a retail electricity business. Pacific Gas and Electric spent over $46 million promoting the passage of Prop. 16, calling it "the taxpayers right to vote act." Opponents to Prop. 16 spent around $91,000 against the proposition. Proposition 16 was defeated, 52 percent to 48 percent. Looking at this proposition, I had to ask myself, "Why does PG&E want to spend $46 million protect my right to vote?" Especially in voting for a proposition to protect my right to vote? This was obviously a means for PG&E to protect their monopoly position in the power business by forcing local governments from getting into the power business with an insurmountable two-thirds majority vote. Perhaps California voters realized this, and shot Prop. 14 down.

But there is also more to this ballot initiative. For the past six months, PG&E have been embroiled in a controversy of replacing customers current meters with Smart Meters. Apparently these PG&E Smart Meters have been overcharging customers, generating 1,000 customer complaints to regulators. The smart meter controversy has been a public relations nightmare for PG&E, where the utility company has been facing a consumer revolt against the smart meters, even to the point of lawsuits filed against the PG&E for overcharging customers. What is important to realize here is that PG&E is embroiled in a controversy of overcharging customers with their installation of a shoddy product--the smart meter. Now PG&E is bankrolling a proposition to maintain their monopoly on gas and electricity services with money that we pay into PG&E to purchase their gas and electricity. All to make sure that we will not be given the opportunity to select our local governments to provide gas and electrical service to us, rather than PG&E--I'm not proposing that local governments providing retail power services are better or worst than what PG&E can provide. I'm just showing the ridiculousness of PG&E's position on this initiative.

Still, the ballot initiative was very close to passing--being defeated by four percentage points. PG&E sunk a huge amount of money into Prop. 16, and nearly got away with passing the initiative. Had PG&E not been embroiled into the smart meter controversy, I seriously wonder if the company would have been able to pass the initiative? It is an interesting question to ponder.Proposition 17, Auto Insurance Initiative: Finally, I want to talk about Proposition 17, the Auto Insurance Initiative. This initiative would allow insurance companies to offer a discount to drivers who continuously maintained their auto insurance coverage, even if they changed their insurance companies. The initiative would also allow insurance companies to increase premiums to drivers who do not have continuous insurance coverage. Proposition 17 was funded by Mercury Insurance, which contributed $14.6 million to the "Yes on 17" campaign. Proposition 17 failed to pass, with 52 percent of voters saying no, and 48 percent saying yes. What is interesting about this proposition is really the number of consumer complaints in California against Mercury insurance. In June, 2008, Mercury Insurance paid a $250,000 settlement for claims violations against California drivers. The California Department of Insurance conducted a review of consumer complaints filed against Mercury Insurance. A total of 258 violations were discovered from 121 files reviewed over a period from January 2004 through December 2005, ranging from unreasonable delays in affirming or denying insurance coverage, and issuing claim payments to California drivers. In addition, a 275-page report, released in February, 2010, by the Department of Insurance, and Insurance Commissioner Steve Poizner, revealed that Mercury Insurance may have violated numerous California state laws from the mid-1990s to 2004, which included:

-- Flagging some consumers for higher rates if they had been in an accident, even if it was not their fault.

-- Not immediately granting coverage to applicants including military personnel on active duty, "artists," those employed "in the entertainment industry as actors, dancers, etc.," and emergency vehicle drivers.

-- Raising insurance premiums after its sales agents quoted prices for discounts for which the consumer was not eligible. The department said this was the single largest category of complaints it received about the firm.

-- Collecting higher premiums than allowed by law by requiring its brokers to return part of their fees to the company.

-- Requesting information about customers' "national origin," a practice that the department said "could raise questions about the legality of Mercury's personal automobile policy cancellation and non-renewal decisions" under state law. Mercury agreed to block such data after the state investigators raised concerns.

With all the trouble Mercury Insurance has been in with the California Department of Insurance, it is no wonder that Mercury wanted this ballot initiative to pass. It is almost like Prop. 17 would have legalized Mercury's deceptive practices against California drivers, leaving them with no recourse. But this brings up a problem for Mercury Insurance--they spent over $14 million to pass Proposition 17. Mercury Insurance was tied to Proposition 17. And all the talk that the Yes on 17 campaign tried to present the proposition as a benefit to California consumers, the campaign was bankrolled by a private insurance company. When has a private insurance company ever presented a law or ballot issue that would actually benefit consumers over that insurance company's self-interest?

This brings up an interesting contradiction on the influence of money in political campaigns. For individual candidates, we've seen how plowing huge amounts of their own money into their political campaigns could allow them to win the primaries--see Meg Whitman and Carly Fiorina. Even Steve Poizner plowed over $24 million into his campaign for the GOP nomination for California governor, only to be outspent by Meg Whitman's $71 million--and Meg Whitman won. Had Whitman not entered the race, Poizner may have gotten the GOP nomination with his $24 million bankroll. It is like, if individual candidates are willing to spend enough money, they could possibly win nominations to California public offices. Now look at the corporations funding ballot initiatives--specifically PG&E's $46 million funding for Prop. 16, and Mercury Insurance's $14 million for Prop. 17 initiative. Both propositions failed by four percentage points. Are California voters smart enough, or suspicious enough, to suspect ulterior motives that corporations may have in funding propositions, but ignore such ulterior motives that private individuals may have in spending huge amounts of their own personal fortunes for political offices, or their own political gain? It is a strange contradiction.